Investing in growth stocks, especially small ones, can come with considerable risk. But sometimes, the payoff for taking on the risk can be significant. Some stocks have even been 10-baggers in just a period of five years. Three growth stocks that would have turned a $5,000 investment into $48,000 or more over the past five years include Celsius (NASDAQ: CELH), Mara (NASDAQ: MARA), and Super Micro Computer (NASDAQ: SMCI).
Here's a look at how these three stocks have done, and whether they could still be good investments to hang on to over the next five-plus years.
1. Celsius
Five years ago, Celsius was an upstart energy drink maker whose market cap was just over $200 million. Today, its valuation is around $6 billion, and it is establishing itself as one of the top energy drink companies in the world. Along the way, it partnered with beverage giant PepsiCo, which is now a key distributor. A $5,000 investment in the business back in early 2020 would be worth around $66,160 today.
Investors have been down on Celsius stock of late, however, on news that PepsiCo optimized its inventory levels of Celsius products (i.e., it was distributing too much) and concerns rose that perhaps demand has been slowing down.
But it may be a bit premature to assume that Celsius' business is in trouble. Consumers have been cutting back on discretionary spending since the economy hasn't been all that strong in recent quarters, and PepsiCo's adjustment may prove to be temporary. Celsius' business experienced a 31% year-over-year decline in revenue last quarter (which ended on Sept. 30, 2024) largely due to the optimization, and the big question mark is whether its growth rate can recover.
I think this can still be a good growth stock because Celsius possesses a lot of potential in the sugar-free energy drink market. Now may be a good time to buy it on the dip, since its shares have nose-dived 47% in six months. There's some risk here, but if you can stomach it, the potential returns could be significant.
2. Mara
Another growth stock that has generated massive returns for investors in just the past five years is Mara. The company has benefited from Bitcoin's rising valuation, with individual coins selling for roughly $101,313 at the time of this writing.
Mara mines for Bitcoins, which means its financials will fluctuate significantly depending on how the cryptocurrency is doing. Within the past four quarters, its bottom line has been as high as a $337 million profit and as low as a $200 million loss.
Taking a chance on the stock five years ago would have involved enormous risk, with Mara's market cap being around just $3 million back then. But for investors who were bullish on crypto, it may have made sense to take a bet on the up-and-coming Bitcoin miner. If you invested $5,000 in Mara five years ago, your investment would be worth around $91,240 right now.
But despite its enormous gains over the years, I wouldn't invest in the stock given its exposure to crypto, and the volatility that comes with it. If you're bullish on Bitcoin, it may still be a good buy, but investors should tread carefully with this crypto stock since its future gains likely won't be nearly as strong as they have been over the past five years given its much larger valuation today.
3. Super Micro Computer
Five years ago, computer server manufacturer Super Micro Computer's market cap was north of $800 million. The catalyst for the stock's surge in value has been largely due to the emergence of ChatGPT and the excitement around artificial intelligence (AI) within the past couple of years.
Companies have been loading up on servers and AI-related infrastructure, which has opened up the floodgates for Supermicro, whose sales have been skyrocketing as a result of the scorching-hot demand.
If you invested $5,000 in the business in early 2020, your investment would be worth around $48,260 at the time of this reporting, and that's even with the tech stock's mammoth fall in value over the past 10 months. For months, investors have been dumping the stock amid concerns that its financials may not be reliable after its auditor, Ernst & Young, resigned last year saying that the company's internal controls were poor and that it didn't want to be associated with the financials.
Investors are in a holding pattern, waiting to see if the new auditor, BDO USA, will find any issues and whether the business will release both its year-end and quarterly financials, which are already overdue. The last set of financials the company released was for the third quarter of fiscal 2024, which ended on March 31, 2024.
While the stock may still be a good long-term buy, it all hinges on those overdue financials, and if the new auditor raises any issues. For now, this is a stock that's too volatile to take a chance on, and investors are better off taking a wait-and-see approach with Supermicro.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Celsius. The Motley Fool has a disclosure policy.
